Shipping school is in session!
Before we dive into the differences between the major carriers, a little background on me: I got the idea for shipping school after working at several e-commerce startups in the past, where, to be honest, I made many errors .
To speak bluntly, staying on top of the eCommerce fulfillment game can be tricky, especially with something constantly evolving like the shipping and logistics industry. sometimes navigating is a bit like trying to solve a rubik’s cube made of ever-changing colors.
So, I thought I’d funnel my expertise into a free, easy-to-digest resource where new shippers can find the information they need, when they need it.
Speaking of new carriers: Whenever an eCommerce business gets off the ground, entrepreneurs always hit what I call the “vessel hunting” stage. When it comes time to fulfill orders, they face two critical questions:
- How much will it cost to ship these packages?
- Which operator will give us the best rates?
There are three main carriers to choose from in the United States: USPS, UPS, and FedEx. all three offer excellent services for both individuals and small businesses. Depending on what you and your business need, one may be the best option compared to the others.
let’s get to it.
- usps vs ups vs fedex: overview
- carrier costs [2022]
- 5 ways to reduce carrier costs
- usps , oops, & fedex: which is better for different use cases
- having flexibility in transportation options is key
- usps vs. oops vs. fedexfaqs
usps vs ups vs fedex: an overview
Although they may seem similar at first glance, the three major US carriers specialize in different areas of the industry. As a crash course, I have written a brief description of each operator below.
usps shipping
usps is the carrier built for people. literally. When it was founded in 1775, USPS was built on the promise of universal service for all Americans at affordable prices.
usps is the only carrier legally authorized to access every mailbox in the country and has developed an unmatched network to deliver mail to every home in the united states. take advantage of this same network to also offer several types of mail at the lowest rates.
Generally speaking, usps specializes in handling small, lightweight packages under 20 pounds; think of packages that contain items like clothing, books, and cosmetics.
one of the best things about usps is that it also offers specially discounted services like cube priority mail, where shipping rates are based on the outside dimensions of the package and not its total weight.
Individuals and businesses can access these special “cube” rates when they use online shipping software to purchase discount postage online; More on this later.
increase sending
ups is the ideal carrier for large and heavy packages. think of products like televisions, pre-assembled furniture and more. While the USPS only allows a maximum weight of 70 pounds per package, UPS has a maximum weight threshold of 150 pounds.
ups also offers a lot of express services at affordable e-commerce package rates, though they tend to be priced slightly higher than usps.
they also offer an emergency delivery service called ups express critical, which is the main emergency delivery service in less than 24 hours worldwide.
Another area that ups specializes in is the shipping and delivery of high-value items. With UPS, shippers can insure packages up to a maximum value of $50,000. this makes it the carrier of choice for shipping luxury consumer goods such as high-end watches, collectibles and rarities. We’re looking at you Pokémon card collectors.
shipping by fedex
if usps is the “purified spring water” and ups is the “coca cola” of the shipping industry, then fedex is the “lacroix”.
fedex specializes in express and overnight shipping, when you need to ship something fast, but it’s not an emergency. Their standard overnight delivery services are typically marginally less expensive than UPS. fedex is also the leading b2b e-commerce operator.
In addition to specializing in these areas, fedex is also the best option for shipping special items, such as perishable food products or temperature-controlled products.
In fact, fedex offers specific boxes, like its patented cold pack, which can keep shipments between 35°f and 46°f for 48 or 96 hours without the use of dry ice or gel packs. This makes FedEx the go-to carrier for e-commerce food startups in the pre-packaged meals space.
carrier costs [2022]
Below is a visual comparison of the different carriers and the main shipping options: ground, express and overnight.
carrier
land
3-day express
overnight
usps costs include:
- Scheduled Pickups – USPS offers free package pickup services that you can schedule on their website. Pickups are based on availability, but you can also request a specific time slot for a fee.
- Free Tracking – All USPS shipping services offer door-to-door tracking , with real-time updates every time packages are scanned during their journey to their final destination.
- Free Insurance: Priority Mail and Express Express packages come with $50 sure if you buy postage at the post office or on the usps website. If you use shipping software to purchase USPS postage at commercial prices, the free insurance increases to $100 per package. note: other usps mail services, such as first-class package, media mail, and retail, do not include free insurance.
- volume discounts: usps offers cheaper rates to shippers who use shipping software to access commercial pricing rates and/or who partner with fulfillment providers like shipbob who are given discounts due to high shipping volume (since they ship packages for thousands of e-commerce brands).
additional costs include:
- Free Tracking: All ups services offer free door-to-door tracking.
- Free insurance for anything under $100: Under the ups store package and shipping guarantee, ups will cover the cost of postage and package contents up to $100 in the event of a missing or damaged shipment.
- trade discounts: Although not publicly posted, ups discounts are available to high-volume shippers on a negotiated case-by-case basis, or shippers who partner with a 3pls to take advantage of economies of scale.
what fedex costs include:
- Free Tracking: All FedEx services come with door-to-door tracking.
- Free insurance for anything under $100 : Per FedEx Packaging Commitment, FedEx will cover the cost of postage and package contents up to $100 in the event of shipment loss or damage.
- trade discounts: Although not publicly posted, fedex discounts are available to high-volume shippers on a negotiated case-by-case basis, or shippers who partner with 3pl’s to take advantage of economies of scale.
five ways to reduce carrier costs
Optimizing your shipping strategy, including costs, can help improve your bottom line. Here are five helpful tips on how you can lower your shipping costs, no matter which carrier you’re using.
1. optimize your packaging size (the smaller the better)
Shipping is an industry where size matters; Do not let anyone tell you otherwise. Regardless of which carrier you choose, making sure your packaging is as small as possible is the most effective way to keep shipping costs down.
If you use packaging that is too large for your items, you may be charged for the dimensional weight of your package, rather than its actual weight. Simply put, dimensional weight (or “dim” for short) refers to the amount of space your package takes up on a carrier’s truck. Shipping companies will charge you the “weight” that makes them the most money: the actual weight of your package or its dimensional weight.
spoiler alert: dim weight is always way more expensive than you’d like, and like vegas, the house always wins.
When it comes to the dimensional weight of a package, none of the carriers will hesitate to charge you these additional fees. it means more money for them, after all!
As such, new submitters often find themselves in one of those “don’t hate the player, hate the game” situations. however, you can rig the game in your favor by optimizing your packaging size to avoid dimensional weight charges in the first place.
“Pillows are not small items, which makes them difficult to store and expensive to ship due to dimensional weight. Though they’re lightweight, they’re big, so you pay for the space they take up on a delivery truck. and the further away the shipping destination is, the more expensive it will be to ship them.
I knew I needed a cost-effective way to help me ship pillows at launch, and shipbob turned out to be the solution.”
tracey wallace, founder of doris sleep
2. ask about discounted shipping rates
Saving the most money on shipping is all about taking advantage of “economies of scale.” In other words, the more packages you ship, the more leverage you’ll have in negotiating discounted rates with carriers.
However, getting into these types of deals isn’t as easy as walking into your local post office or ups store with a briefcase full of cash. it needs to go through the proper channels. That’s why it makes more sense to work with a third-party logistics company (also known as “3pl”) like shipbob.
When you partner with shipbob, you’re not just working with logistics professionals who handle all your order fulfillment needs for you.
Since Shipbob fulfills orders for thousands of online brands from fulfillment centers around the world, you gain access to discounted shipping rates from all the major carriers Shipbob partners with.
Think of working with a leading 3pl like donning a jersey and stepping onto the court with the chicago bulls of the 1990s, with michael jordan in his prime. By joining a stellar team like that, he’s just given his business the best chance at success when it comes to serving his customers.
“working with shipbob has been great. being able to take advantage of usps media mailing rates through shipbob has been a huge help.”
lee nania, founder of subsubmarine
3. ship from nearest shipping zones
When most e-commerce businesses start out, they often keep inventory on hand and fill their own orders. however, this can present a problem when distance is factored into the shipping equation.
In addition to how much your package weighs and how big it is, the total distance it has to travel to reach its final destination is important.
Carriers use shipping zones to measure the distance a package travels, not in miles, but in groups of zip codes, from point of origin to destination.
There are eight total shipping zones in the United States. the location an order is shipped from is the point of origin and is in zone 1. the address it is shipped to is the destination zone.
if you are in california and you send a package to new york, it will cost you. That’s why it’s not uncommon for growing online brands to outsource fulfillment to a 3PL like Shipbob, so they can easily split inventory across multiple fulfillment locations.
When an order is placed, it is automatically routed to the closest distribution center to its destination.
Shipbob has fulfillment centers in major cities across the United States, so we can distribute our inventory across the country to reduce shipping zones and the costs associated with shipping orders to destinations that are far away.”
founder of my calm blanket
4. switch to polythene envelopes
Poly mailerstake up less space than boxes on trucks and weigh less, and as a result, they are charged a lower price by each of the three carriers than three-dimensional packages.
Obviously, this isn’t the best option for shipping fragile items, but if you can put your products in polythene envelopes instead of boxes, here’s an easy trick to lower shipping costs from the start.
5. select standard shipping
Opting for a slower shipping speed automatically reduces costs. standard shipping is always cheaper than expedited shipping, and ground shipping is always cheaper than standard (ups ground, fedex ground, usps retail ground).
however, standard is obviously slower than expedited and sometimes ground service can take longer than expected. therefore, you will need to decide which shipping speed is right for you.
If what you’re shipping doesn’t require expedited delivery, there’s no reason to incur extra costs if it means your products may reach your customers just a day or two sooner.
usps, ups, & fedex: which one is better for different use cases
usps, ups, and fedex all offer similar shipping options for e-commerce businesses, but there are some variations, especially when it comes to cost. Below is a breakdown of the best shipping company based on different use cases.
use cases
best operator
reason
examples of use case scenarios with answers (updated April 2022)
example 1:
You must deliver a small box, say 5 x 5 x 5 inches and weighing 2 pounds, containing cosmetics within the next 5 business days to a customer who lives in another state.
With this example, let’s go beyond the boundaries of the contiguous United States. seattle to miami
in this situation, fedex reigns supreme, but it’s expensive. It would take almost $50 for your package to be delivered to a residential address on time.
usps is much cheaper with a shipping rate of less than $15, but your package would arrive a couple of days late.
example 2:
You must deliver 5 printed books, all the same size, within the next 10 business days to a customer who lives in another country.
maybe they have a bookstore in denmark. so from new york to a danish bookstore it would cost via fedex a minimum of $250.
In this situation, UPS and USPS actually reign supreme. however, with cheaper shipping, there is less guarantee of arrival dates.
having flexibility in transportation options is key
Almost every successful business grows to the point where it’s time to optimize your eCommerce shipping strategy. if you’re a growing brand, it might be time to partner with a 3pl like shipbob.
If you’re shipping a variety of packages to locations across the country (or even global shipments), a 3pl shipment like shipbob allows you to better serve your customers by fulfilling customer orders from the most optimal locations, so you can meet customer expectations and keep logistics costs low.
Also, sometimes the “best” carrier for you can change, depending on the type of package you’re shipping, the distance you have to travel, and many other factors.
For example, it may be more profitable to move a heavier package the next day with UPS instead of USPS. in this case, you don’t want to stay locked with a single provider. shipbob automates this multi-carrier selection process for all of your clients, regardless of size.
Because of the number of packages it is responsible for fulfilling, shipbob is able to pass along deeply discounted rates from all three carriers (among others) to its customers. In turn, this kind of flexibility can even give your customers more choice when ordering, ultimately leading to a better experience with your brand.
at the end of the day, partnering with a 3pl like shipbob takes all the headache out of warehousing, shipping, and fulfillment, so you can focus on doing what you do best: growing your business.
usps, ups and fedex frequently asked questions
Here are answers to three of the most common questions about the differences between USPS, UPS, and FedEx.